Worth-Less Grants

Rising Pell grant awards are not keeping pace with rising tuition
and a new report shows that they are depriving needy students of
educational choice

WASHINGTONWhile the average Pell grant award has more than
doubled between 1977 and 1997, the grant’s actual worth has declined by
approximately 50 percent. And that, said officials from the
organizations that produced a recently released report on federal
grants and college affordability, is particularly disturbing news for
students from low-income families.

In 1977, the average Pell grant award was $759, and that covered 39
percent of the cost of a public four-year institution and 19 percent of
the cost of a private four-year institution. Twenty years later, the
average grant was $1,577. But that only covered 22 percent of the price
of public and 9 percent of private four-year schools.

At the upper end of the spectrum, in 1977, the maximum Pell grant
award of $1,400 paid for 72 percent of the cost of a public and 35
percent of a private four-year school. In 1997, the $2,470 maximum paid
for 34 percent of public and 13 percent of private four-year
institutions.

The average Pell grant award actually declined by 23 percent —
adjusting for inflation — over two decades, but college prices rose by
49 percent while family incomes crept up by just 10 percent over the
same period.

“The fact remains that the prices are still increasing, and the
lower-income students and parents bear the brunt of that,” said Jamie
P. Merisotis, president of The Institute for Higher Education Policy
(IHEP). The Washington, D.C.-based organization has produced the report
— Do Grants Matter?: Student Grant Aid and College Affordability —
with The Boston-based Education Resources Institute (TERI), a nonprofit
guarantor of privately issued student loans.

The average net price — the sticker price minus the total grant
aid received — of attending a private four-year college for a student
from a family with income below $10,000, for example, rose from $8,178
in 1989-90 to $11,591 in 1996-98 — an increase of 42 percent.

Although Congress has authorized maximum per-student increases up
to $5,800 in 2003-04, it’s unlikely that much money will actually be
provided, Merisotis said.

Even with the recent Pell grant increases, the maximum award would
need to double to more than $6,000 to pay for the same proportion of
college prices that they did 20 years ago.

About 3.6 million of the nation’s 14 million college students
receive Pell grants, and more than half of Pell recipients in four-year
schools qualify for the maximum amount of funding.

This problem is compounded by the rise in state grant aid for
undergraduates that is distributed on a non-need basis as opposed to a
need-basis. In 1995, for example, non-need-based state grants increased
by more than 40 percent while need-based state awards increased by less
than 10 percent. And making matters even worse, as public funds for
higher education have dwindled, states have begun adding
merit-eligibility requirements to their need-based grants.

“Virtually all states now have need-based student aid programs in
which recipients must demonstrate merit to be eligible for the program
or to continue their participation,” the report notes.

“It is clear that, by definition, non-need-based forms of grant aid
are not as effective at addressing the affordability gap as need-based
grants …,” the report continues. “The attachment of merit criteria to
need-based grants may be further detracting from this mission. Thus,
the comparative growth of non-need-based aid and merit criteria provide
cause for future concern.”

A large part of that concern deals with access to institutions of
choice. According to Thomas D. Parker, senior vice president of TERI,
if low income students don’t attend community college, they won’t be
able to afford to go to college at all.

“What we like to think is we have a system where people have both
access and choice. But what we’re rapidly developing is a system where
people have access but not choice,” Parker told The New York Times.

Additionally, there has been some grumbling about the higher
education lobby’s more concentrated efforts to get lower interest rates
for federally backed student loans than more money for federal Pell
grants. The feeling is that one segment of students was sacrificed so
that another segment could benefit.

“[The higher education lobby] decided to put most of their effort
behind federal college loans, which have a much bigger constituency —
the middle class,” Parker complained. “The result is that many low
income people can’t even begin to think about going to a four-year
college.”

But noting that the maximum award for Pell grants increased by
$425, or 14 percent, over the past two year, Terry Hartle, a spokesman
for the American Council on Education, countered that needy students
haven’t been abandoned altogether.

“Increasing the Pell grant by $100 costs $350 million, which is a
lot even by Washington standards — especially when it competes
directly with Head Start, biomedical research, and job training,” he
said.

To request a copy of Do Grants Matter?, contact The Education
Resources Institute at (800) 255-TERI, extrusion 4762; or use the Web
address <www.teri.org>.

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